Microsoft shares have had a tough year and Citi Research lowered its price target for the stock on Wednesday. However, the firm still believes strongly in Microsoft’s role in the growth of artificial intelligence.
Citi analyst Tyler Radke lowered his price target for Microsoft to $570 from $620 but kept a Buy rating on the stock. This new target suggests about 48% potential growth from Microsoft’s closing price of $384.93 on Tuesday.
Shares rose 1.7% to $391.37 on Wednesday. The stock has had a difficult 2026, falling 20% year-to-date and 24% over the past 12 months.
Radke said he is still positive about Microsoft, noting the company’s strong position as businesses work to manage token spending and make AI more efficient. Citi expects a strong fourth-quarter earnings report but warns that investors should be ready for higher AI spending in fiscal 2027.
Radke expects Microsoft’s flagship franchises, Azure and Microsoft 365 Copilot, to show stronger returns and accelerating growth as the company moves into fiscal 2027, which he believes will drive faster revenue and earnings-per-share growth through fiscal 2030. Azure is Microsoft’s cloud computing platform, while Copilot is its AI-powered assistant.
In a separate move, Evercore ISI raised its Microsoft price target to $525 from $510 on Wednesday. Analyst Kirk Materne said the firm is watching for a balance between faster AI revenue growth and more typical capital spending increases.
Materne added that Microsoft is likely to remain aggressive with AI spending going forward, and he does not expect the upcoming fourth-quarter report to fully clarify how the company is balancing free cash flow against capital expenditures. He characterized current investor sentiment toward the stock as overly cautious, adding that he sees a favorable catalyst path ahead for the shares.
